Some companies lend themselves to being long-term investments. Often they’re less susceptible to technological disruption and are in robust industries. Here are three shares I think fit the bill.
Big cyber potential Defence giant BAE Systems (LON:BAES) (LSE: BA) should prosper because defence is an industry that’s not going away any time soon. I’d suggest that over the next decade cyber-warfare and the need for more complex weapons is likely to play into the hands of BAE.
It has significant contracts with the UK government but also operates in many other countries including the US, Germany and Australia. This international profile is part of the attraction for me because it makes the company less reliant on UK government spending, or the state of the UK economy.
Cybersecurity is a potential growth area for BAE. An example of the potential is how BAE has partnered with Dell to market the first scalable, hybrid cloud solution of its kind to the US government. Cyber remains a small but potentially fast-growing part of the business.
BAE looks to be a good investment for the next decade due to the opportunities for growth, the lack of disruption within the defence industry and ongoing government spending on defence.
Safe as houses The housebuilder Taylor Wimpey (LSE: LON:TW), although in a very different industry, displays some of the same favourable qualities as BAE Systems. The industry has government support as shown by Help to Buy and building houses is not an industry that will be killed off by technology. Housebuilders will still be around and thriving in a decade’s time.
Even if economic conditions worsen as some predict they will, Taylor Wimpey appears to be well-positioned to cope. It has £300m cash. The current order book – excluding joint ventures – is worth £2.5bn. The short term land bank now equates to around 5.1 years’ supply. So it has money, land and plenty of work. This seems like a combination that should stand it in good stead.
Providing investors with a dividend yield of over 4% and trading at a P/E of only seven I think the shares offer a potentially very profitable combination of income and growth.
More good news My last recommendation is high-flying pharmaceuticals behemoth AstraZeneca (LSE: AZN). Since spurring advances from Pfizer (NYSE:PFE) in 2014, the group has prospered. Recently the share price has been shooting up. Despite this I still think it’s worth buying into and holding for a decade.
Pharmaceuticals is a defensive industry (as people will always need their medicines regardless of the state of the economy) and one that will thrive, I believe, over the next decade.
The company’s drugs pipeline is the fuel behind the rocketing share price. Most recently the pharma giant has announced two positive results from trials for cardiovascular and diabetes drugs, Brilinta and Farxinga and before that for anifrolumab – a potential treatment of systemic lupus erythematosus (SLE).
With a value around the £100bn mark, AstraZeneca is showing why it shrugged off its American rival. Undoubtedly there’ll be disappointments with some drug trials, but if enough of the pipeline makes it to market, then the company will keep prospering.
These are the shares I’d be most confident investing in for the next decade as they occupy strong market positions in resilient industries and offer potential for both income and growth.
Andy Ross owns shares in AstraZeneca. The Motley Fool UK has recommended AstraZeneca. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2019